April 21, 2017

Venezuela: Have the starving people finally had enough of socialism?

Socialism--the Democratic party loves it!  "Free" health care, subsidized food, lots of "free" welfare for those who either can't or won't work.  Sounds wonderful, right?

But virtually every socialist government eventually runs into the same problem:  As Margaret Thatcher said, "The only problem with socialism is sooner or later they run out of other peoples' money."  And of course corruption is always a problem, because socialist governments end up ruling with an iron fist and the corrupt pols are never punished.

Sorta like here, where the CIA leaks from the top in an effort to overthrow Trump.  Oh well...

Venezuelan pol Hugo Chavez knew that if he promised the people "free" health care, ten-cent-per-gallon gasoline, food at artificially-low prices due to government subsidies, and free college, they'd elect him president.

He was right.

So how is it that now, 19 years after he took power--at a time when Venezuela had the highest per-capita income in all of Latin America--Venezuelans are starving?


The list of incredibly dumb rules and policies ordered by the government is a very long one.  If you wanted to utterly destroy a once-thriving economy you couldn't do it faster than Venezuela's socialist rulers have.

How can a country with the world's largest oil reserves be poor?

If you're not familiar with the oil business you have no idea of the magnitudes of the numbers.  When Chavez was elected, Venezuela produced about 4 million barrels of oil every day--most of which was exported.  And in Venezuela the government owns it all.  At $50 per barrel, exporting 3.5 million barrels per day would bring the government $175 million every day.

That's five Billion dollars every month.  Nice.


Today the country's oil production has fallen to 2.5 million barrels a day.  Still a huge revenue stream, but a lot less than before.  Even so, oil still accounts for about half of the country's revenue.

When world oil prices plummeted from $115 a barrel in 2014 to nearly half that--due almost entirely to a huge INcrease in U.S. production due to innovative drilling techniques developed by private industry--the government saw a huge drop in revenue.  A prudent leader would have cut spending and taken every possible step to encourage economic activity.  But socialists don't worry about where they'll get necessary money--it's up to the people to pay whatever they demand.  So Chavez and company kept showering "free" things on the population to keep winning elections.

Great for Chavez and his family, not great for the country.

The huge drop in oil production is due mainly to Chavez's thirst for revenge: in 2002, after a coup failed to remove Chavez from power, experienced employees of Venezuela's state-run oil company staged a strike.  Chavez retaliated by firing 18,000 of them. 

Like all socialists, it never occurred to him that oil doesn't just jump out of the ground and into a pipeline.  It takes a LOT of skill--and experiencce--to keep wells producing.  And in fact most Venezuelan oil is "heavy"--thick--so it has to be coaxed out of the ground by heating it with steam.  The replacement workers--many of them political supporters of Chavez--didn't have the skills, and the result was predictable. 

But the mismanagement was just beginning.  As revenue declined, the first thing Chavez cut from the budget was replacement parts for the wells and pumps.  After all, pumps couldn't vote, so....

Wanting more cash, Chavez began "nationalizing"--i.e. seizing--the properties of foreign oil companies in Venezuela.  Without cutting-edge technology from foreign companies, production dropped further.

When Chavez died, his vice-president--the stupid, cunning and charmless Nicholas Maduro--took over, intent on keeping all the socialist policies of his mentor.  Faced with lower oil revenue and unwilling to cut the "freebies" that kept them in power, he ordered government agencies to delay payments to foreign vendors.

Among the companies he stalled was the Russian state-owned shipping conglomerate Sovcomflot, which provides 15 percent of Venezuela's oil transportation.  When the unpaid bills reached $30 million, the Russian company refused to release a tanker carrying Venezuelan oil until the bill was paid.
  
Why are Venezuela's troubles relevant to us?  Simple: the relentless propagandizing of young Americans by public schools, universities, Hollywood and the Democrat party has made young people think socialism is great, and prompted a dislike of free markets.  When Bernie Sanders says "I will make college free to everyone--an idea now being echoed even by so-called "mainstream" Dems like NY governor Andrew Cuomo--and when Dems call for the government to forgive all student loans, the people who would benefit are 100 percent in favor.

How can those of us who see the real outcome of these policies reverse this disastrous trend? 

One possible avenue is to ensure that the disastrous results of socialist policies in countries like Venezuela, Cuba, North Korea and others are thoroughly known by young Americans.

And stop voting for pols who push socialism--regardless of their political party.

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